GDP. Politicians and academics – maybe even you – use it as a proxy for the health of a nation. When it increases, journalists reassure readers and viewers that their country is doing fine. If it falls, leaders promise to turn things around. GDP growth has become synonymous with national success.
But do you know what GDP really is? I suspect most citizens don’t even know what it stands for, partly because its full name – gross domestic product – doesn’t really clear anything up.
Part of the trouble with GDP is that explaining it would really demand a whole article unto itself (and candidly, I’m not qualified to write that piece). But to summarize, GDP is an estimate of the productivity of a nation’s citizens. However, the calculation of something so vast – the value of every toaster, every car wash, every plane ticket – is beyond the comprehension of any single human. GDP must be broken into slices, each piece separately tallied by a different group of people, to finally be summed into the number we read in the news.
Despite the complexity of its calculation, GDP should not be mistaken for a precise measure. Tracking every good and service that an economy generates is simply impossible, and so much of the tabulation relies on estimates, which in turn rely on judgments. That’s not to say we should dismiss GDP as witchcraft, because it is still the best metric we have for quantifying a country’s economic output. And there are few national measures that don’t suffer from the same precision problem; unemployment and homeownership rates are equally challenging to estimate.
But GDP is different from other metrics because we don’t just use it descriptively; it’s a target as much as a measure. And its status extends beyond the realm of economics: driving GDP is a primary goal of incoming political administrations. Should a metric with all these imperfections occupy this place above almost every other measure? Even if it could be measured with greater precision, should it be used as a barometer for national success? What does success even mean in this context?
Enter gross national happiness, or GNH.
Gross National Happiness: An Alternative to GDP?
It’s not clear that an economic index is the right way to measure whether a nation is thriving. Sure, a country’s productivity is a probably an excellent proxy as citizens work toward basic economic security: having a home, access to food, readily available medical care, et cetera. But once these goals are achieved, financial gain can simply mean upgrading one’s iPhone a year sooner. The returns of economic improvement are rapidly diminishing.
For the last six years, the United Nations has released a World Happiness Report. The 2018 edition was over 170 pages long. Buried deep in the document is this chart of American happiness and GDP since the seventies:
The relationship between GDP and happiness would appear to be… nonexistent. The changes in reported happiness look to be essentially random noise, while productivity has climbed steadily for more than 40 years. And it’s worth noting that GDP here is measured per capita, not in the absolute, so the increase cannot be attributed to population growth. Americans really have become more productive, at least as measured by GDP. But have they simultaneously stagnated in life satisfaction?
The answer might simply be that we’re chasing the wrong goals, pursuing economic growth instead of things that matter more, like public infrastructure and the education system. This, of course, is very hard to prove. But it seems safe to say that the current approach isn’t working very well, and one might argue that life has little meaning beyond its subjective experience. If we aren’t happy and our neighbors aren’t happy and our children aren’t happy, what’s the point?
GNH and GDP
Of course, it’s possible that America’s happiness problem is unique – that our nation is an outlier, and in general GDP is a perfectly good predictor of happiness. But that isn’t the case. The happiest nations in the world, according to the UN report, are Finland, Norway, Denmark, and Iceland. Those economies are 44th, 29th, 36th, and 106th, respectively, in gross domestic product. Meanwhile, the world’s runaway champions in GDP – the US and China – rank 18th and 86th in happiness. What about GDP per capita? The leading nation is Qatar, 32nd in happiness.
Is there any relationship at all here?
Well yes, actually, if you read far enough. The nations last in happiness, South Sudan, the Central African Republic, and Burundi, are very poor nations. The last page of the UN list, numbers 105 to 156, is full of countries that you’d recognize as distressed: Haiti, Rwanda, Egypt, and more. The only surprise to me was India, the world’s sixth largest economy by GDP; however, on a per-capita basis, India is actually fairly weak. The least happy countries, by and large, are not productive, and it seems likely that their economic troubles are partly responsible for their crises in life satisfaction.
But much of the happiness rankings remain difficult to explain. The authors of the UN report attempt to model the differences in life satisfaction using six other measures for each nation: social support, life expectancy, freedom, cultural generosity, perceptions of corruption, and, of course, GDP. The authors’ model using these measures accounts for approximately 75% of the variation in happiness across countries. Explaining three-quarters of a nation’s happiness may seem like an accomplishment, and perhaps it is, but that means that 25% of subjective well-being remains difficult to account for.
GNH in Bhutan
Bhutan, a small East Asian country, has been using GNH as its national measure of success for almost fifty years, since its king suggested the idea in an interview at an airport. In Bhutan’s implementation, the concept of “happiness” is divided into four pillars and nine domains. The citizens are extensively surveyed, and the results are aggregated into net national happiness numbers. The summary of the 2015 Gross National Happiness Survey includes the below chart.
Over 90% of respondents were “happy”, according to results. A 2012 article in the The Guardian said that the country had doubled its life expectancy and made significant strides in school enrollment and infrastructure development over the last 20 years, along with committing to carbon neutrality and forest preservation. Bhutan ranks around 165th in GDP but a more respectable 97th in happiness.
Still, 97th is merely average. Life in Bhutan might not be all that great. It doesn’t take long to find sensationalist titles on the internet like “Gross National Happiness in Bhutan: A Lesson in the Perils of Utopianism”. Also from The Guardian article: “….800,000 people survive on less than $1.25 a day, and 70% live without electricity. [Bhutan] is struggling with a rise in violent crime, a growing gang culture and the pressures of rises in both population and global food prices.”
Still, it’s important to remember that Bhutan is just one possible implementation of GNH. It’s entirely possible that both its successes and flaws are unrelated to its choice of national metric. Regardless, it’s clear that fixating on happiness isn’t a cure-all in itself.
The Case for GNH in Advanced Countries
Gross national happiness may not fix all our problems, but it could certainly fix some. According to NPR, the wealthiest 10% of Americans owned 81% of stocks in 2013. GDP growth is strongly tied to the growth of financial assets, and if most of the benefits accrue to a small portion of the population, then GDP changes may not be measuring the wealth of a population so much as that of the richest subset. (This will remind statistics nerds of why the median is typically preferred over the mean as a measure of central tendency in the social sciences – unevenly distributed resources can skew the average of the data.)
Even if GDP is effectively measuring wealth, is wealth the right thing to measure? As discussed above, citizens of economically advanced nations experience less benefit per marginal dollar. At some point of material comfort, even large increases in income can have negligible long-term effects. Does a nicer car really make you that much happier? Maybe. But as technology makes many goods cheaper and cheaper, while automated assistants can handle more and more of our trivial chores, it’s possible that the privileges of the rich will be increasingly attainable for all. And at that point, how much can money improve our lives?
The era of automation brings another challenge: many people may no longer be able to derive a sense of purpose from their career. There is a real chance — and in my mind, a very high one — that robots will put low-skilled workers out of a job permanently. Maybe the newly-unemployed will get a great severance package, and maybe countries will offer a universal basic income for those who simply don’t have the skills to compete with automation. But even if everyone keeps getting their paychecks, it’s hard to believe that this won’t trigger existential crisis on a national scale. The country will likely be producing more goods and services than ever, all while most of its people are miserable. At that point, it might be time to think hard about investing in more than just economic growth.
The Trouble with Measuring Happiness
Implementing GNH brings its own challenges, unfortunately. First off, it’s simply difficult to measure subjective happiness. Research has shown that people report substantially different levels of life satisfaction from week to week and even from day to day. Controlling for the “noise” in happiness surveys is challenging; participants may simply not have gotten enough sleep the night before or may have found $20 on their way to work. Neither of these occurrences matters much in the grand scheme of life.
Perhaps worse, it’s very difficult to define happiness itself. Many studies ask participants about “life satisfaction”, but this is subtly different from happiness. While GDP offers a (seemingly) objective measure, there is no illusion of objectivity when the metric to be measured is subjective experience itself.
Even if we could reliably measure happiness, there are a lot of very personal factors at play. Is your social life going well? Is your significant other thinking about breaking up with you? New developments in society, like social media and dating apps, could systematically change people’s happiness in these areas. Only the most ardent interventionists would say that government should directly aid individuals with these kinds of issues. GNH-advocates might argue that nations would just focus on improving anything they can, but could that lead to a Big Brother-esque intrusion into our personal lives? If the goal is to make people happier, politicians might turn all the dials at their disposal.
What’s To Be Done?
The evidence isn’t conclusive on GNH… yet. But political scientists and even economists should start taking it more seriously. Thinking outside the box in social science can be challenging, because there is little or no data to extrapolate from. Study of new subjects must start somewhere, though.
Someday, I’d love to see a national government test the idea. That might best be executed with a true randomized experiment: take eight or so demographically-diverse cities and randomly choose half to start using life satisfaction as their primary metric for success over a ten-year period. This isn’t perfect, as it’s a small sample and a relatively short time horizon, but it’s vastly superior to no test at all. And if GNH does lead to superior outcomes, the government could expand the test to more cities.
Targeting happiness might strike you as a wild, unfeasible way to guide a nation. But if we don’t approach big problems with an open mind, we won’t find big solutions. A willingness to seriously explore revolutionary ideas could be what it takes to shape a better future – the visionaries of the past would certainly say so.